Key Technical Indicators: (February 10, 4 PM -> February 17, 4 PM Hong Kong Time)
BTC against USD decreased by 1.4% (97.5K USD -> 96.15K USD), ETH against USD increased by 1.9% (2.64K USD -> 2.69K USD)
Overview of Spot Technical Indicators
The market was very quiet this week, trading within a narrow range (this range was converted from the initial wedge formation). The support level firmly held below 95.75K USD, extending to 94-95K USD; meanwhile, selling was seen consistently above 98K USD. Considering the strong support below, we still believe the price will break out of the current range in the next few trading days. However, as the actual volatility continues to decline deeply, the implied volatility may take some time to move to the 40+ level. The current resistance is between 98-99K USD, and higher at above 100K USD; if the 94-95.7K USD support is broken, stronger support will appear at 89-91K USD.
In the medium term, we remain optimistic about BTC, expecting it to trade in the 120-130K USD range. But the expected time may be delayed to later this year.
Market Themes
Overall, the macroeconomic market was relatively calm this week. Although CPI and PPI were slightly higher than expected, the market seems to have found a balance on the Fed's rate hike/cut actions. The sensitivity to Trump's tariff news is also gradually declining (the market's reaction to this week's "reciprocal tariff" news was mild).
Cryptocurrencies performed flat again, with BTC firmly holding in the 94-99K USD range. After the release of the strong CPI index, the price rebounded from the bottom of the range, indicating strong support at this level, but quickly retreated after surging to 98K USD. Ethereum also continued to trade in the 2.55-2.85K USD range, but with greater local volatility. Other altcoins had mixed performances, with SOL being heavily sold off ahead of the supply lock-up in early March.
Crypto expert Saxo brought optimistic sentiment to the market on Friday, stating that cryptocurrencies are about to see very positive developments. The preliminary deadline for the first terms of the Crypto Working Group is this Friday, the 22nd, so we expect to see some market excitement over news or rumors later this week. But overall, the market seems unwilling to chase higher prices without more tangible catalysts.
BTC ATM Implied Volatility
The level of implied volatility this week has declined slightly in a sideways trend and gradually found support, as its absolute level is visibly lower than before. But this masks the fact that the term structure is quite steep. As the days of lower volatility trading expire, the far-dated maturities should be gradually raised. But in fact, they have not been raised (sideways or even declined), which essentially means that the volatility of the far-dated contracts is gradually declining. Combined with the recent low actual volatility, this indicates that the cost of holding long positions in the far-dated contracts is quite high.
If the price continues to stay within 94-100K USD, we expect the ATM implied volatility to continue to decline, and with the quite steep term structure, we believe the optimal trading strategy is to hold a short position in the March expiry locally. At the same time, holding out-of-range wing long positions in the shorter term can provide adequate protection when the price breaks through.
BTC Skewness/Kurtosis
As several attempts to break through the strong support at 94-95K USD have failed, the skewness has gradually shifted upwards this week. This is also because the market is quite cautious about holding short positions outside of this range, given the current low level of implied volatility and the fact that actual volatility and implied volatility are likely to rise rapidly regardless of whether the price breaks above or below.
Kurtosis has been quite muted this week outside of the short-term maturities. The continuously narrowing price range confirms that the market demand for local put options in the 95-100K USD range is low, and also because of the low volatility level, the market is very cautious about holding short positions outside of this range.
Wishing you all good luck in your trading this week/month!
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